Complaint Seeks Ruling to Require Forward Air
to Close Transaction Under Legally Binding Terms of Contractual
Agreement
Omni Also Issues Open Letter to Forward Air
Shareholders to Share Its Views on Strategic Wisdom of
Combination
DALLAS, Oct. 31,
2023 /PRNewswire/ -- Omni Logistics ("Omni"), a
technology-driven provider of global multimodal logistics solutions
and specialized services, today announced that it has filed a
complaint in the Delaware Court of
Chancery against Forward Air Corporation (NASDAQ: FWRD) ("Forward
Air") regarding the companies' previously announced
transaction.
Omni's lawsuit seeks specific performance under the Agreement
and Plan of Merger between Omni and Forward Air dated August 10, 2023 (the "Merger Agreement"),
requiring Forward Air to comply with its obligations to complete
the transaction. The complaint also seeks a judicial declaration
confirming that Omni has complied with all required provisions of
the Merger Agreement. Omni has requested a trial before the Court
of Chancery to obtain a ruling enforcing the Merger Agreement prior
to the Merger Agreement's outside expiration date of February 10, 2024.
In conjunction with the complaint, Omni issued an open letter to
the shareholders of Forward Air.
###
October 31, 2023
Dear Shareholders of Forward Air,
This afternoon, Omni Logistics filed a lawsuit in the
Delaware Court of Chancery seeking
to require Forward Air to comply with their obligations to complete
our previously announced combination. We felt it was important to
share with you why we so strongly believe this transaction will
create significant value for Forward Air, Omni, and our collective
stakeholders.
The industry has been evolving towards a more integrated service
model for customers, accelerated by the supply chain disruptions
and heightened customer focus on cost and efficiencies that have
marked the past few years. Forward Air CEO Tom Schmitt articulated as much on Forward Air's
earnings call this morning, and we agree. That evolution underlies
the fundamental strategic logic at the core of our transaction:
combining Forward Air and Omni enables our two companies to meet
the evolving needs of customers by creating an all-in-one expedited
LTL partner that removes a meaningful layer of cost and complexity,
without sacrificing service and with the experience and expertise
of our highly seasoned, proven commercial team.
Early indicators of the strategic logic of the combination have
been powerful. Omni's LTL revenue pipeline has increased by around
480% since the announcement in anticipation of the unique
Omni-Forward Air proposition. Forward Air's customers appear to be
responding similarly: as they stated in their October 30 earnings press release, since the
combination was announced on August
10, their "average daily volumes with domestic freight
forwarders increased by more than 14%."
Just as our customers want to work directly with their LTL
provider, Forward Air wants to work directly with shippers; as
they've said publicly, that was a key driver for this transaction.
Despite Forward Air's leadership position in the expedited space,
they are the only publicly traded LTL provider without a direct
relationship with the overwhelming majority of its end customers –
and that is not a position for long-term strength.
Creating such direct connections reduces costs for Forward Air
and Omni's existing customers and also attracts shippers who
currently engage with traditional, less optimal LTL carriers in
order to ensure direct interactions. This transaction will
encourage a significant customer segment to upgrade their direct
carrier relationships, taking advantage of our all-in-one model
uniting Forward Air's leading LTL network with Omni's top-quality
service and capabilities. By becoming the most attractive option
for all shippers, irrespective of their relationships across the
value chain, Forward Air will be a more valuable company for
shareholders by making them more indispensable to customers.
To that end, Omni's business model is an excellent strategic fit
for Forward Air to focus on high-value freight and leverage its
expedited LTL core – just as they articulated when the transaction
was announced, and as further reinforced by their earnings
commentary. Omni provides high-touch, supply chain solutions for
the complex shipping needs of approximately 7,000 blue-chip
domestic customers. We focus primarily on expedited air and ground
services to drive density in the domestic over-the-road supply
chain, rather than services that are not time critical, such as
ocean, drayage, or intermodal services. Combining with Omni will
accelerate Forward Air's focus on high-value expedited LTL,
enabling us to serve as the low unit-cost provider to our customers
with direct relationships. This is a winning model that will
enhance Forward Air's competitive strength in the logistics space
and create an industry innovator with attractive margins and growth
prospects.
It is particularly notable that Forward Air's earnings
commentary on their call earlier today heavily emphasized their
desire to ramp up direct relationships with domestic shippers. In
line with the view of one analyst on that call, it is unclear to us
why Forward Air would now seek to convince their shareholders that
they should significantly invest in organically growing their
direct LTL business without having solved, by their own admission,
for volume/price mix. As Forward's CEO stated the day of the
announcement, "This combination of these two amazing companies is
getting us to the fastest possible speed of going after that
$15 billion expedited LTL market, the
best way in the fastest way." We believe shareholders should
question what has changed – particularly as our respective
customers ramp up their business with us and give positive feedback
on the deal.
While we are not yet shareholders of Forward Air, we intend to
be strategic and long-term ones upon the closing of this
transaction. We believe Forward Air's third quarter earnings
results and commentary make clear that customers continue to seek a
simplified cost structure and more direct relationships with their
shipping partner. This combination remains, and is now even more
clearly, the best path to achieve their desired strategy for
shareholder value creation.
Omni believes Forward Air's threat to terminate the transaction
is unenforceable under our binding contractual agreement – and we
are confident that no impediment exists to closing the transaction
immediately. More importantly, we believe that doing so is
essential to best position our combined company to drive
accelerated long-term growth and maximize value for customers and
shareholders in a rapidly evolving industry environment.
We look forward to completing our transformational partnership
as soon as possible.
Yours,
J.J. Schickel
Chief Executive Officer, Omni
Logistics
###
Omni is advised by Alston & Bird, LLP; King & Spalding
LLP; Wachtell, Lipton, Rosen & Katz; Potter Anderson &
Corroon LLP; Goldman Sachs & Co. LLC; and J.P. Morgan
Securities LLC.
About Omni Logistics
Omni Logistics is a global multimodal provider of air, ocean and
ground services. Complex supply chain solutions are designed
according to each customer's specific freight needs, challenges and
objectives, leveraging the expertise and advanced training of over
3,500 employees in more than 100 locations. Omni Logistics focuses
on removing supply chain inefficiencies and providing low
cost-per-unit solutions to approximately 7,000 customers worldwide.
In addition to operating a full portfolio of multi-modal solutions
both domestically and internationally, Omni Logistics manages a
robust portfolio of supplemental services for enterprises dependent
on the efficient movement of high value freight. As a signatory of
The Climate Pledge, Omni Logistics is committed to creating supply
chain visibility and eliminating waste in order to provide more
sustainable transportation solutions.
Forward-Looking Statements
This press release includes forward-looking statements that are
based on information currently available to management,
management's beliefs, as well as on a number of assumptions
concerning future events. Forward-looking statements are not a
guarantee of performance and are subject to a number of
uncertainties and other factors, which could cause the actual
results to differ materially from those currently expected. In
providing forward-looking statements, the company does not intend,
and is not undertaking any obligation or duty, to update these
statements as a result of new information, future events or
otherwise.
Media Contact
Jeremy Fielding / Nathan Riggs / Mark
Fallati
Kekst CNC
KekstOmni@kekstcnc.com
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SOURCE Omni Logistics, LLC